Rule Changes Could Turn Finance Professionals Into Whistleblowers

Oct 11, 2012

CFOs, accountants and others in the corporate finance community could soon be required under a global ethics code to blow the whistle when they suspect their employers are engaging in illegal activities.

CFO magazine reports that an exposure draft from the International Ethics Standards Board for Accountants (IESBA) could change the understanding of confidentiality between corporate accountants and their clients or their companies' finances.

Some parties (namely auditors and those responsible for financial reporting) would be required to report suspicious or illegal activities to the audit committee and management, the source explains. "If the response within the company is, in the auditor's judgment, 'not appropriate' and 'of such consequence that disclosure would be in the public interest,' the auditor must disclose the suspected illegalities to 'appropriate' external authorities, according to the proposal," the magazine writes.

Meanwhile, accountants working for corporations would have to follow similar guidelines but would only discuss the matter with internal groups.

When it announced the proposed change in August, the IESBA chair, Jorgen Holmquist, commented that breaching confidentiality was still a serious matter, but noted that it falls second to protecting individuals and society from the consequences of non-disclosure.